HR BLOCK FINAL TEST (ITC 2025) 2 VERSIONS ACTUAL EXAM
200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONLES (VERIFIED ANSWERS) | ASSURED SUCCESS!!
Why is it important to distinguish qualified home mortgage
interest from personal interest? - ANSWER-Qualified home
mortgage interest is deductible, with limitations, on Schedule A.
Personal interest, such as credit card interest, is not deductible.
What are returns and allowances? - ANSWER-Returns and
allowances are amounts included in gross receipts that were
refunded to customers who returned merchandise for a refund
or who were given a partial refund because they received
damaged merchandise or for other similar reasons.
How is cost of goods sold determined? - ANSWER-Cost of
goods sold is beginning inventory plus purchases and other
direct costs of goods minus the ending inventory. It is calculated
on Schedule C, Part III, page 2.
If the taxpayer has contract labor, or subcontractors, what should
you remind the
,taxpayer that they should do? - ANSWER-File Forms 1099-NEC.
This is required
if they are paid more than $600 but can still be completed for
amounts lower than
$600.
What is the purpose of self-employment tax? - ANSWER-To pay
social security
and Medicare taxes on self-
employment income.
Qualified business income (QBI) is derived from various trade or
business net amounts. In general, QBI is the net amount of
what? - ANSWER-Qualified business income (QBI) is the net
amount of qualified items of income, gain, deductions, and
losses with respect to the taxpayer's qualified trade or business.
How do members of the clergy and statutory employees pay
income taxes and self-employment taxes? - ANSWER-Generally,
clergy are considered employees of the church and receive a
Form W-2; however, they are considered selfemployed in regard
to social security and medicare. Because of this, they must
complete Schedule SE and pay self-employment taxes.
,A statutory employee is an employee for social security and
medicare tax purposes and self-employed for income tax
purposes. They must report their wages on Schedule C. Their
social security and medicare taxes are generally withheld from
their paychecks, so they do not need to complete Schedule SE.
Determining if a trade or business is considered a specified
service trade or business (SSTB) is significant for taxpayers that
have taxable income over the lowest thresholds. What type of
trades or businesses are considered SSTBs? - ANSWER-A
specified service trade or business (SSTB) is any trade or
business involving the performance of services in the fields of
health, law, consulting, athletics, financial services, brokerage
services or any trade or business in which the principal asset of
the business is the reputation or skill of one or more of its
owners or employees, or that involves the performance of
services that consist of investing and investment management,
trading, or dealing in securities, partnership interests, or
commodities.
What kinds of property are not depreciable? - ANSWER-
Examples of assets that are not depreciable include:
Property placed in service and disposed of in the same year.
Personal-use assets.
Equipment used to build capital improvements.
, Assets with an unlimited or indeterminable life (such as land).
Most intangible assets (such as copyrights and patents) or
inventory.
For MACRS purposes, you need to divide real property into two
categories. What are they? - ANSWER-Land, which is not
depreciated, and structures, which are depreciated.
How is the Modified Accelerated Cost Recovery System
(MACRS) General Depreciation System (GDS) deduction
computed in the year of disposition for property being
depreciated using the half-year convention? - ANSWER-First,
determine the class life using the Table of Class Lives and
Recovery Periods ("CLADR table").
Second, determine the appropriate depreciation method.
Finally, multiply the basis of the asset by the percentage amount
provided in the
table for the determined depreciation method and the half-
year convention.
Note: The year of dispostion is considered a half-year, as is the
year an asset is
200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONLES (VERIFIED ANSWERS) | ASSURED SUCCESS!!
Why is it important to distinguish qualified home mortgage
interest from personal interest? - ANSWER-Qualified home
mortgage interest is deductible, with limitations, on Schedule A.
Personal interest, such as credit card interest, is not deductible.
What are returns and allowances? - ANSWER-Returns and
allowances are amounts included in gross receipts that were
refunded to customers who returned merchandise for a refund
or who were given a partial refund because they received
damaged merchandise or for other similar reasons.
How is cost of goods sold determined? - ANSWER-Cost of
goods sold is beginning inventory plus purchases and other
direct costs of goods minus the ending inventory. It is calculated
on Schedule C, Part III, page 2.
If the taxpayer has contract labor, or subcontractors, what should
you remind the
,taxpayer that they should do? - ANSWER-File Forms 1099-NEC.
This is required
if they are paid more than $600 but can still be completed for
amounts lower than
$600.
What is the purpose of self-employment tax? - ANSWER-To pay
social security
and Medicare taxes on self-
employment income.
Qualified business income (QBI) is derived from various trade or
business net amounts. In general, QBI is the net amount of
what? - ANSWER-Qualified business income (QBI) is the net
amount of qualified items of income, gain, deductions, and
losses with respect to the taxpayer's qualified trade or business.
How do members of the clergy and statutory employees pay
income taxes and self-employment taxes? - ANSWER-Generally,
clergy are considered employees of the church and receive a
Form W-2; however, they are considered selfemployed in regard
to social security and medicare. Because of this, they must
complete Schedule SE and pay self-employment taxes.
,A statutory employee is an employee for social security and
medicare tax purposes and self-employed for income tax
purposes. They must report their wages on Schedule C. Their
social security and medicare taxes are generally withheld from
their paychecks, so they do not need to complete Schedule SE.
Determining if a trade or business is considered a specified
service trade or business (SSTB) is significant for taxpayers that
have taxable income over the lowest thresholds. What type of
trades or businesses are considered SSTBs? - ANSWER-A
specified service trade or business (SSTB) is any trade or
business involving the performance of services in the fields of
health, law, consulting, athletics, financial services, brokerage
services or any trade or business in which the principal asset of
the business is the reputation or skill of one or more of its
owners or employees, or that involves the performance of
services that consist of investing and investment management,
trading, or dealing in securities, partnership interests, or
commodities.
What kinds of property are not depreciable? - ANSWER-
Examples of assets that are not depreciable include:
Property placed in service and disposed of in the same year.
Personal-use assets.
Equipment used to build capital improvements.
, Assets with an unlimited or indeterminable life (such as land).
Most intangible assets (such as copyrights and patents) or
inventory.
For MACRS purposes, you need to divide real property into two
categories. What are they? - ANSWER-Land, which is not
depreciated, and structures, which are depreciated.
How is the Modified Accelerated Cost Recovery System
(MACRS) General Depreciation System (GDS) deduction
computed in the year of disposition for property being
depreciated using the half-year convention? - ANSWER-First,
determine the class life using the Table of Class Lives and
Recovery Periods ("CLADR table").
Second, determine the appropriate depreciation method.
Finally, multiply the basis of the asset by the percentage amount
provided in the
table for the determined depreciation method and the half-
year convention.
Note: The year of dispostion is considered a half-year, as is the
year an asset is
